Iran Turns To Cryptocurrency in Preparations for the Upcoming Sanctions

Iran Turns To Cryptocurrency in Preparations for the Upcoming Sanctions

A few months ago, the Iranian government turned to cryptocurrency in preparation for the upcoming sanctions. Iran had announced in April that it had developed an experimental domestic cryptocurrency to test whether or not cryptocurrency would be the much-desired savior.

Iran’s new currency will allow people in Iran to send and receive money both locally and internationally. The digital currency will also provide an escape goat from the upcoming sanctions.

The central bank in India is working closely with domestic companies with vast knowledge in cryptocurrency to help develop Iran’s digital currency. The Iranian government has been keenly following Central banks progress on creating the cryptocurrency. The government had to fire the governor of Iran Central Bank, Valiollah Seif who had worked at the bank for the last five years. The government fired him on claims that he was not doing more to prepare the country against the upcoming sanctions.

Iranian government plans to first test out digital currencies in clearing bank transactions. Once the project becomes a success, the public will be allowed to make transactions using the currency. The government hopes to have successfully created a working currency before the US  government imposed its first ban.

The government also plans to create a legal framework that will allow growth of cryptocurrencies in Iran.  The legal framework will also cater for the blockchain and fintech industries. According to reports, the country has already invested more than $2.5 billion to buy various cryptocurrencies.

According to reports, the United State government is planning to impose sanctions in two-phase before the end of this year. The first sanction, set for August 6, will involve sanctioning Iran’s buying and selling of the dollar, gold trade, and other precious metal. It will also entail banning Iran’s automotive trade. the second ban scheduled for November 4 will entail cutting down to zero on the importation of crude oil by the US government from the country.

Iran’s new cryptocurrency position has not always been the case. Iran, like most governments, was not open to cryptocurrencies. The Iranian government become skeptical about the increased crypto trade at the beginning of this year and even banned the trade in April. The ban prohibited local banks and other financial institutions from making crypto transactions.

In the last few months, countries affected by sanctions from the United States governments have turned to cryptocurrencies to save their economies. The first country to seek crypto’s help was Venezuela who has created a state-backed cryptocurrency, the Petro.  Venezuela has also created a new national currency anchored on the Petro.  Since its launch, the Venezuelan cryptocurrency has been rejected by the Indian Government and the US government. One of the largest cryptocurrency exchange, Bitfinex also refused to add the cryptocurrency on its platform.

Russia followed suit a few months ago though they have not created their own digital currency. Russian government officials and businesspersons were reported to have funded Venezuela’s project which created the Petro.  According to the report, Russia funded Venezuela in order to safeguard their financial economy from sanctions by the US government.